Pa. lottery privatization: What's the rush?

Wednesday, December 26, 2012

Tom Wolf doesn’t understand the Corbett administration’s rush to privatize the state lottery — and the business leader knows a thing or two about the lottery, having run it as state Revenue Secretary a few years ago.

From his perspective, the lottery isn’t broken — so why “fix” it?

It’s well-run — without a lot of bloated bureaucracy.

It returns something like a 30 percent net profit — which most business owners would be pretty happy with these days.

The lottery provides a lot of funding for programs benefiting “older Pennsylvanians.”

And a proposed deal with a British company — the only bidder for the job — guaranteeing $34 billion in profits for the state over the next 20 years seems like a chancy proposition. Not unlike buying, well, a lottery ticket.

The leader of the Wolf Organization — who has been cited as a possible candidate for governor — makes some excellent points.

It might be that the only way to boost such profits would be to dramatically expand lottery gambling opportunities — and it seems like we already have plenty of opportunities for people who really can’t afford it to plunk down their cash on games that the “house” usually wins.

Is that what we want in Pennsylvania? Don’t we have enough “gaming” what with the existing lottery and the casinos that dot the state?

It would be pointless to argue against state-sanctioned gambling — people are going to do it, and that genie left the bottle long ago. But it does seem reasonable to debate how much state-profiting gambling is necessary.

And it does seem like the Corbett administration is rushing a deal to privatize the lottery.

A recent lawsuit filed by state Democrats argues the governor doesn’t even have the authority to privatize the system without approval by the Legislature.

State officials need to slow this process, think it through, make certain they understand all the ramifications and pitfalls of such a move. If, in the end, it seems like a can’t-lose proposition that’s not designed to turn state gambling devotees into the nation’s biggest losers, then go ahead.

There’s nothing inherently wrong with privatizing state services if they can be done more efficiently by the private sector.

The state’s liquor and wine sales system is a good example of that. The Liquor Control Board has tried in recent years to improve customer service and to operate more like private-sector enterprises, but it’s doing a lousy job of that. Here’s a good, if perhaps isolated, example: On the night before Thanksgiving last month, an evening when you would expect many people to stop for a bottle of wine with dinner the next evening, the state store at the Manchester Crossroads Shopping Center in York had just two clerks on duty — and an unmanned register. The checkout lines circled all the way around the inside of the very large store. That’s just plain bad management.

The state stores should definitely be privatized — but it’s not clear you can say the same thing about the lottery. You just don’t see that kind of inconvenience and inefficiency in lottery sales. Tickets are readily available at private business — and you only see significant lines when the Powerball jackpot reaches the stratosphere.

That’s not to say there aren’t inefficiencies in the lottery, but they’re not readily apparent to the outsider — or even to a former insider such as Wolf.

Let’s think this through before gambling on something we might come to regret.